4. Suppose that you are provided with the following information: State Probability RA RB Boom 0.20 20% 15% Normal 12% 10% Recession 0.20 4% 5% Pandemic 0.02 -40% 50% 0.58 Suppose also that expected market return is 10% and risk-free rate is 2%. (a) Give an example of a company that can generate such a big positive return in the pandemic state. (b) Compute expected returns and standard deviations for stocks A and B. (c) Compute the correlation between stock returns. (d) Compute market betas for stocks A and B. What is market risk premium? @) Which stock has more systematic risk? Total risk? (f) (5 points) Suppose that you have $1,000 and you invest $400 of it in share A, $500 in share B and remaining in risk-free asset. Compute mean, standard deviation, market beta of your portfolio